Is land transfer tax payable when property is transferred from an estate to a beneficiary?

When real property passes from a deceased person's estate directly to a beneficiary under a will or on intestacy, the transfer is generally exempt from Ontario land transfer tax. The provincial government recognizes that this type of transfer is not a sale — no consideration is paid — and an exemption applies to vesting of title by way of grant to a beneficiary.

However, the exemption is conditional. If the beneficiary receives the property subject to an existing mortgage and assumes that mortgage, the outstanding mortgage balance may constitute consideration and attract LTT to the extent of that assumed debt.

Situations involving trusts, corporate beneficiaries, or complex estate plans may not qualify for the straightforward exemption. Additionally, if the estate sells the property to a third party (rather than vesting it directly in a beneficiary), the third-party buyer pays LTT in the normal way. Executors dealing with estate real property should confirm the LTT treatment with an estate lawyer before completing any transfer.